The present invention relates generally to an investment processing system for managing financial assets, and more particularly to an investment decision-making process using prior decision making information related to a group of individual investors.
Traditionally, individual investors have used investment brokers to invest in the security markets. Such brokers may provide individual investors with limited advice, however that advice often does not yield the desired investment returns. More recently, the Internet has allowed individual investors to make their own investment decisions through online brokerage firms. However, individual investment is difficult because the investor must wisely select stocks or investments to buy and sell from so many different securities in the stock markets. Additionally, the individual investor is exposed to higher risk because he or she does not have sufficient information about the stocks, or a thorough understanding of the markets, or the skills and knowledge to evaluate various investments from different industries and countries. As a result of these risks, some investors gain from their investment decisions while many other investors may lose, particularly in markets with volatile conditions.
In an effort to minimize risks in investment trading, some individual investors invest in mutual finds managed by investment professionals. Managed mutual fund investment purportedly reduces risks because the investment firm uses professionals to select diverse stocks based on such criteria as industry, economic conditions and risk potential. The fund managers have full responsibilities for managing and making trading decisions for the fund. Various fund managers have different research, financial knowledge and analytical skills. Accordingly, the returns for mutual funds vary depending on the fund managers. The individual investors, however, have minimal control over management of the funds. Thus, individuals investing capital in the mutual fund companies are disadvantaged. For example, the individual investor who possesses a good ability to select investments, but has no control over the management of the funds, will not utilize his or her decisions.
A collective trading system according to the invention creates an entirely new investment possibility for a group of individual investors to collectively and actively participate in an investment decision-making process which uses prior decision information to select investments or stocks. The stocks are bought or sold in the financial markets. Using the prior decision information of individual investors, the individual investors collectively select more winning stocks. Investors are more likely to get better returns with lower risks. The returns will benefit all participating investors and not just particular individual investors.
The collective trading system includes Weighted Winning Stock Selection (WWSS) coefficients which are used to represent historical decision information about past stock selection by member investors. The WWSS coefficients are then used to assist with future decisions and distribute related gains or losses which result from trading in the markets. The participating individual member investors in the system make decisions which are weighted according to each investor's historical performances in selecting stocks. In particular, past performances in decision making of stock selection are reflected in WWSS coefficients. For example, for individual participating investors who select more “winning” stocks which are traded and realize a profit, their WWSS coefficients will be greater than the WWSS coefficients of those individual investors who select less “winning” stocks. With greater WWSS coefficients, individual investors are rewarded more if their decisions select more winning stocks. WWSS coefficients provide rewarding incentives which encourage the participating investors in the system to enhance their knowledge and research abilities about companies and markets, and to develop a better understanding in financial investment such that decisions will result in improved returns for traded investments.